The pricing of steel, including steel plate, is influenced by a complex interplay of factors, leading to fluctuations in its cost. This article delves into the key elements affecting steel prices, specifically focusing on understanding the cost per pound.
Steel is often priced by hundredweight (CWT), representing the cost per 100 pounds. However, in certain contexts like materials market reports, the price of carbon steel may be expressed per pound. For example, a CWT price of $40 equates to $0.40 per pound. Adding to the complexity, units are frequently quoted in tons, where 1 ton equals 2,000 pounds.
For instance:
2,000 pounds = 1 ton = $40 CWT x [2,000 pounds / 100 pounds]
1 ton = $800*
*Note: This price is for illustrative purposes only and does not reflect current market values.
Since steel plate is generally priced by CWT, knowing your order’s weight is essential for cost estimation. The weight, and therefore the cost, is determined by factors like thickness (or gauge) and size.
Key Factors Influencing Steel Prices
The price of steel is subject to a range of factors. Below are the most important things that determine the final cost.
Supply and Demand Dynamics
Steel, as a fundamental raw material, is governed by the principles of supply and demand, which determine the average market price. An oversupply typically results in lower market prices, while a limited supply pushes prices upward. Supply chain disruptions, for example, led to decreased supply and increased demand, causing CWT to reach unprecedented levels. Although supply has since stabilized, prices haven’t fully returned to pre-surge levels due to ongoing demand and low inventories at service centers.
Steel Grade Variations
Similar to how a high-end SUV commands a higher price than a basic economy car, certain steel grades are inherently more expensive.
Image alt text: Stack of ASTM A572 steel plates showcasing their robust construction and application in structural engineering.
Generally, the CWT increases as the steel grade becomes more specialized, whether through the addition of alloys or the use of quenching and tempering techniques to enhance the material’s hardness.
Steel material categories generally rank from lowest to highest price as follows: carbon steel, High Strength Low Alloy (HSLA) steel, Pressure Vessel Quality steel, Abrasion Resistant steel, and Quenched & Tempered steel.
Order Quantity Discounts
As with many products, purchasing in larger quantities can lead to lower per-unit costs. This principle also applies to steel. Suppliers can offer time savings (such as speed and human resources) into CWT for bulk purchases (typically 22 tons or more). Furthermore, suppliers can benefit from similar time-saving advantages when purchasing in bulk from mill manufacturers, which are subsequently passed on through their CWT.
Future Needs Considerations
Even if you don’t have a large quantity requirement, your potential future needs can still affect the CWT price. A customer who needs one piece of AR500 steel plate for target practice has less future need than someone who needs one piece of AR500 each month for five years. When requesting quotes, be sure to inform steel suppliers of any future needs, even when buying in smaller quantities. This knowledge will enable the supplier to provide a more accurate price for both current and future orders.
Country of Origin Impact
The country in which the steel is produced can significantly influence the overall CWT price. While some projects may require specific countries of origin to ensure quality standards, others may have greater flexibility in sourcing materials.
Suppliers that source from both domestic and international mills are more likely to offer a wider range of steel material prices, giving you more options when you buy.
Processing Requirements
The overall cost will likely increase if you ask for steel that has been cut, drilled, or cleaned, but the CWT may decrease if the steel supplier can handle these requests internally. Suppliers may have greater leeway with CWT by combining a material order with a processing request. Be sure to inform providers of any processing requirements when you ask for quotes.
Material Location and Transportation
The cost of transporting steel material, both in terms of time and money, can be significant due to its size and weight. To address this, reputable steel suppliers maintain distribution centers in strategically important cities across North America. This enables the supplier to deliver steel to customers across the continent more quickly and affordably. While some suppliers include transportation costs in the CWT, the majority treat it as a separate expense. Make sure you understand how transportation will impact your total cost when assessing steel material quotes.
Grade Liquidation Opportunities
A steel supplier may occasionally have an overstock of a non-standard size or grade and will reduce CWT to move the material (and free up warehouse space for more popular sizes and grades). If a project allows for flexibility in size and/or grade, it is certainly worthwhile to mention this when requesting quotes.
Image alt text: Diagram illustrating the calculation of steel weight based on dimensions, density, and quantity for accurate project planning.
Supplier Specialization
When sourcing steel materials, working with a niche supplier can result in significant CWT savings. For example, Leeco® Steel specializes exclusively in supplying steel plate. Because this is our primary area of expertise, we are able to provide significantly more competitive steel plate prices than businesses that provide a more varied assortment of steel products (i.e. bars, coils, and sheet).
Prime vs. Secondary Materials
The cost of the material will also depend on whether you buy prime or secondary steel plate. The majority of what is sold by Leeco Steel is prime steel plate, which meets regulatory or mill proprietary standards for chemical and physical qualities and is priced at standard rates.
Secondary steel plate, also referred to as sub-prime plate, does not adhere to regulatory standards due to minor flaws like failing to meet flatness standards, having a subpar surface, or lacking a mill test report. Due to these flaws, secondary steel plate is less expensive than prime steel plate. Typically, secondary steel plate is utilized in non-structural applications, including trash cans, roll-off containers, and secondary pipe rollers.
When purchasing steel plate for your project, determine whether prime plate is needed for your application or whether secondary plate might be a possibility.
Market Regulation Impact
Market regulation can have a significant impact on both global and domestic CWT. Tariffs on steel imports can raise the price of materials with non-domestic origins, increasing demand for cheaper domestic materials. Basic macroeconomics then take effect: increased demand lowers supply and raises prices.
Governments will also occasionally subsidize domestic steel producers, allowing them to price their products lower than their actual cost of production. This type of regulation can have a knock-on effect, affecting steel prices around the world.
Government Bills & Legislation
Government bills and laws that are passed can have a big effect on how much steel plate is needed.
The Inflation Reduction Act (IRA) and the Infrastructure Investment & Jobs Act (IIJA) are two recent bills that provide billions of dollars to industries that use a lot of steel, like wind and solar energy, manufacturing, roads, and bridges.
As funds from these bills are distributed in 2024, 2025, and beyond, demand for steel plate will increase, which could drive prices higher if demand exceeds supply.
Raw Material Costs
The cost and availability of raw materials used to produce steel can significantly impact CWT prices. Increased prices for steelmaking materials like iron ore, pig iron, or scrap metal raise the cost of steel production. Steel producers often pass these higher production costs on to customers by raising material prices.
The availability of raw materials also affects steel production. Steel production will slow and the supply will decrease if there is a shortage of a raw material used to make steel, which could put upward pressure on steel plate prices.
Impact of Natural Disasters & Conflicts
Unpredictable and unstoppable, natural disasters can be devastating. Communities find themselves needing to rebuild buildings, bridges, utilities and more. In the wake of natural disasters, demand for steel material needed for rebuilding can push prices temporarily higher across the market.
Wars and conflicts can also disrupt the steel market through economic sanctions or supply chain and production constraints. A current example of this is the war between Ukraine and Russia. Ukraine and Russia are both major producers and exporters of raw materials used to make steel, so the conflict between the two countries impacted available steel supply in 2022. Many countries also enacted economic sanctions on Russia, which restricted steel imports of Russian material.
While this list of 13 factors that affect steel material pricing is not exhaustive, it provides a solid understanding of the key players in steel material pricing, which will help you find the best steel material supplier for your project needs.
